Quarterly report pursuant to Section 13 or 15(d)

Stock-based Compensation

v2.4.0.6
Stock-based Compensation
 6 Months Ended
Jun. 30, 2012
Stock-based Compensation [Abstract]  
Stock-based Compensation
9.  Stock-based Compensation

In the first half of 2012, the Board of Directors of the Company approved grants under the Long Term Incentive Plan for an aggregate of 1,043,550 stock options and an aggregate of 391,765 restricted stock units ("RSUs") to certain employees and directors of the Company. The options vest monthly over four years for employees and one year for directors and the RSUs vest annually over three years in equal increments.

The Company recognizes compensation expense for all stock-based payment awards made to the Company's employees, consultants and directors based on estimated fair values. The valuation of stock option awards is determined at the date of grant using the Black-Scholes Model. This model requires inputs such as the expected term of the option, expected volatility and risk-free interest rate. To establish an estimate of expected term, the Company considers the vesting period and contractual period of the award and its historical experience of stock option exercises, post-vesting cancellations and volatility. The estimate of expected volatility is based on the Company's historical volatility. The risk-free rate is based on the yield available on U.S. Treasury zero-coupon issues. The forfeiture rate impacts the amount of aggregate compensation for both stock options and RSUs. To establish an estimate of forfeiture rate, the Company considers its historical experience of option forfeitures and terminations.

The fair value of stock-based awards was estimated based on the following weighted average assumptions for the three and six months ended June 30, 2012 and 2011:
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
 
2012
 
 
2011
 
 
2012
 
 
2011
 
Dividend yield
 
 
0
 %
 
 
0
 %
 
 
0
 %
 
 
0
 %
Expected volatility
 
 
92
 %
 
 
87
 %
 
 
92
 %
 
 
87
 %
Risk-free interest rate
 
 
0.72
 %
 
 
1.76
 %
 
 
1.02
 %
 
 
1.87
 %
Expected term
 
5.6 years
 
 
5.6 years
 
 
5.6 years
 
 
5.3 years
 
 
Stock option activity for the six months ended June 30, 2012 was as follows:
 
Options
 
 
Weighted
 Average
 Exercise Price
 Per Share
 
 
Weighted Average
 Remaining
 Contractual Life (in
 years)
 
 
Aggregate
 Intrinsic Value
 (in thousands)
 
Options outstanding at December 31, 2011
 
 
5,053,435
 
 
$
12.55
 
 
 
6.89
 
 
$
-
 
Granted
 
 
1,043,550
 
 
 
1.54
 
 
 
 
 
 
 
 
 
Exercised
 
 
(49,864
 )
 
 
1.69
 
 
 
 
 
 
 
 
 
Forfeited, expired or cancelled
 
 
(337,522
 )
 
 
20.18
 
 
 
 
 
 
 
 
 
Options outstanding at June 30, 2012
 
 
5,709,599
 
 
$
10.18
 
 
 
7.26
 
 
$
2,790
 
Options exercisable at June 30, 2012
 
 
3,745,862
 
 
$
13.79
 
 
 
6.54
 
 
$
1,152
 
 
The valuation of RSUs is determined at the date of grant using the closing stock price. To establish an estimate of forfeiture rate, the Company considers its historical experience of forfeitures and terminations.

Unvested RSU activity for the six months ended June 30, 2012 is summarized below:
 
 
 
 
 
 
Weighted-
 
 
 
Number of
 
 
Average Grant-
 
 
 
Shares
 
 
Date Fair Value
 
Unvested balance at December 31, 2011
 
 
903,874
 
 
$
1.69
 
Granted
 
 
391,765
 
 
 
1.42
 
Vested
 
 
(9,231
 )
 
 
1.69
 
Forfeited
 
 
(181,030
 )
 
 
1.69
 
Unvested balance at June 30, 2012
 
 
1,105,378
 
 
$
1.59
 
 
The following table shows total stock-based compensation expense included in the condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2012 and 2011 (in thousands):
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
 
2012
 
 
2011
 
 
2012
 
 
2011
 
Research and development
 
$
295
 
 
$
885
 
 
$
680
 
 
$
1,946
 
Selling, general and administrative
 
 
277
 
 
 
1,399
 
 
 
566
 
 
 
2,110
 
Total stock-based compensation expense
 
$
572
 
 
$
2,284
 
 
$
1,246
 
 
$
4,056